Taxation (International and Other Provisions) Act 2010 section 424

Employers' pension contributions

Section 424 adjusts the calculation of a worldwide group's profit before tax, where an alternative calculation election is in effect, to ensure that employer pension contributions are treated on a tax-relief basis rather than on the basis of accounting recognition.

• This section only applies where a worldwide group has made an interest allowance (alternative calculation) election for a period of account.
• Any amounts recognised in the group's financial statements as profit or loss items in respect of employer pension contributions are excluded from the group's profit before tax.
• The group's profit before tax is then reduced by the actual tax relief that group members are entitled to claim in respect of relevant employer pension contributions paid during the period.
• Employer pension contributions are only "relevant" if the employer paying them is a member of the worldwide group at the time of payment.